With cryptocurrencies establishing a solid foothold in different countries, their respective governments can no longer denote it as unimportant. Now the countries regulate the use of cryptocurrencies. Some of them are even imposing taxes on trades depending upon the volume.
Despite being around for years, there is still confusion about the native taxation policies for cryptocurrencies that can make it hard for traders to go all in. While few countries have not imposed any direct regulations, there are few who already have some regulations in place.
Having a clear understanding of the tax regulations can give traders an edge when swapping cryptocurrencies globally. Here are a few of the major countries that have imposed tax regulations on cryptocurrencies.
Australian Tax Office recently posted new guidelines indicating cryptocurrencies as “forms of properties” that make them taxable. All of the financial gains from cryptocurrencies have to be reported, and the residents have to pay capital gains taxes.
Canada treats cryptocurrencies as investment commodities, and residents can deduct half of the acquired gains from the taxes. However, if a day trader has high transaction volumes, the Canadian Revenue Agency will consider it a business entity that has to file taxes differently. Also, all the traders have to maintain accurate records of all trading activities for capital gains tax.
Germany does not consider Bitcoin subjected to capital gains tax even if its value increases with time. It is one of the reasons that crypto traders want to invest in cryptocurrency in Germany.
However, all the crypto holders must hold the currency for at least one year to exempt it from taxes. Also, crypto business owners have to pay corporate income taxes and additional taxes on gains from personal crypto-related possessions.
Japan being one of the leaders in the crypto world, has legalized the use of cryptocurrencies for daily payments. The country treats cryptocurrencies as commodities that are subjected to various taxes.
The United States
The IRS classifies cryptocurrencies as properties that are liable to taxation depending on the appreciation or depreciation. However, it is not considered legitimate money, and there are no tax incentives for currency conversions. However, crypto holders that experienced an increase in value over the financial year have to pay taxes.
While there are several countries that do not charge any taxes for cryptocurrencies, there are few countries, such as Spain and North Korea, that do charge income tax depending upon the volume of the trade. Every country’s regulation for cryptocurrencies is unique and should be vetted carefully before making any trade.